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Calculate ABC Company's stock price after analyzing earnings and dividends

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Week 4 - Problem 2

Company ABC's earnings and dividends will grow at 0.5% monthly during the next five years.
Its growth will stop after year 5. In year 6 and afterward, it will pay out all earnings as dividends.
Assume next year's EPS is $10 and the dividend is $5 and the market capitalization rate is 9 %.

What is ABC's stock price?

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Manal Elkhoshkhany, MBA
Education
  • BA, Ain Shams University, Cairo Egypt
  • MBA, California State University, Sacramento
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